Freight Broker Guide
A load is gone, the shipper wants its money, and the carrier's cargo insurer just said no. This is the day a broker's contingent cargo insurance was bought for. Whether it pays depends on why the carrier's claim was denied and on what the broker has on file.
This guide covers the common reasons carrier cargo claims get denied, how a contingent policy responds, the conditions it puts on the broker, and what to do in the first hours after a loss. Policy forms vary. Treat everything here as what is common, and read your own form.
The Carmack Amendment governs a motor carrier's liability for interstate loss or damage to freight. The carrier's motor truck cargo policy is a separate contract that pays that liability up to its limit and only for causes it does not exclude. When the policy does not fit the loss, the insurer says no. These are the reasons that come up most.
The carrier stopped paying, or the insurer cancelled for another reason, and the certificate the broker has on file is now out of date. There is no policy in force on the date of loss, so there is nothing for the carrier's insurer to pay.
Many cargo policies list freight they will not cover, or cover only up to a lower amount. Electronics, alcohol, tobacco, pharmaceuticals, metals and similar high-theft loads are common examples. If the load falls on that list, the claim is denied or cut.
Some cargo policies cover only scheduled trucks or listed drivers. A load hauled in a truck the carrier added last week, or by a driver it never reported, may fall outside the policy.
Theft coverage commonly comes with conditions: the truck locked, alarms set, no stops within a set distance of pickup, or never left unattended outside a secured lot. A trailer stolen from a truck stop overnight is a common example.
Spoilage from a refrigeration unit failure is often excluded unless the carrier bought reefer breakdown coverage. Even with it, a wrong temperature setting by the driver is commonly excluded.
A carrier with a $100,000 cargo limit hauling a $250,000 load leaves $150,000 nobody on the carrier side has insured. The insurer pays its limit, less the deductible, and stops.
Cargo policies require prompt notice of a loss. A carrier that waits weeks to report, or never reports, can lose coverage it would otherwise have had.
A denial does not end the carrier's liability. It means the carrier owes the claim itself. Small carriers often cannot pay it, and that is when the shipper turns to the broker.
Contingent cargo is a backup. It responds when the motor carrier's cargo policy does not pay a covered loss: a lapse, an excluded commodity, a limit too low, or another denial. It pays under its own terms, its own limit and its own deductible, not the carrier's.
It protects the broker, not the carrier. The carrier still owes for the freight. After the contingent insurer pays, it can pursue the carrier to get its money back. That is why the insurer cares about the broker-carrier agreement and the shipping papers: they are its case against the carrier.
It also has limits of its own. A contingent policy can carry its own exclusions, theft conditions and commodity limits, and they may not match the carrier's. Our contingent cargo vs motor truck cargo comparison lays the two side by side. Crash claims against a broker are a different policy, covered in our guide to contingent auto liability for freight brokers.
The application for contingent cargo asks how the broker picks and checks its carriers. The answers become what the insurer expects to see when a claim comes in. These are the questions a freight broker application commonly asks:
A broker that cannot show these at claim time puts the claim at risk. If you told the insurer you check every carrier's certificate before the load and the file for this carrier is empty, expect hard questions. The same goes for a shipper contract that made you liable like a carrier: a contingent form may not cover liability you took on by contract, so show that contract to your agent before you sign it. Our broker carrier setup documents guide covers what a clean carrier packet holds.
The middle column is what is common, not a promise. Your own form decides.
| Denial reason | Does contingent cargo usually respond | What the broker should have on file |
|---|---|---|
| Carrier policy lapsed or cancelled | It can, under its own terms, if the broker checked coverage before the load. | A current certificate of insurance received before the load was tendered, and a record of how it was checked. |
| Commodity excluded on the carrier's policy | It can, if the commodity is one the broker declared on its own application and the contingent form does not exclude it too. | The commodities listed on your contingent application, and the rate confirmation describing the load. |
| Truck or driver not on the carrier's policy | It can, under its own terms. | The carrier packet, the signed broker-carrier agreement and the dispatch record naming the truck and driver. |
| Unattended vehicle or theft conditions | Sometimes. Many contingent forms carry their own theft conditions, so read yours. | Messages showing pickup, stops and when the load went missing, plus the police report. |
| Reefer breakdown not covered | Depends on the form. Refrigerated freight is a separate question on the application, and some forms limit or exclude it. | Proof you declared refrigerated loads, temperature instructions on the rate confirmation and any reefer download. |
| Carrier's limit lower than the load | Some forms pay the difference up to their own limit; some respond only when the carrier's policy pays nothing. | The load value, the carrier's cargo limit on its certificate and your own contingent limit. |
| Late notice by the carrier | It can, as long as the broker gave its own insurer prompt notice. | Dated written notice from you to the carrier, the carrier's insurer and your own agent. |
The first day sets up the whole claim. Do these in order.
If you do not have contingent cargo yet, start with our contingent cargo insurance page, and see what contingent cargo insurance costs and what drives the price.
Contingent cargo insurance is a policy a freight broker buys that may respond when the motor carrier's cargo policy does not pay a covered loss. It protects the broker, not the carrier, and it pays under its own terms and limit. It is not federally required; shippers and broker contracts ask for it.
It can, when the denial is for a reason like a lapsed policy, an excluded commodity or a truck not on the policy, and the loss is one your own form covers. It also depends on the broker meeting the policy's conditions, such as having the carrier's agreement, authority and certificate on file before the load. Read your own form, because conditions vary.
No. Motor truck cargo is the carrier's own policy and pays first for freight it hauls. Contingent cargo is the broker's backup and only comes in after the carrier's policy does not pay.
Not before talking to your insurer. A payment you make, or a deduction you take from the carrier, without the insurer's agreement may not be reimbursed and can make the claim harder to recover from the carrier.
Yes, the insurer that pays a claim can pursue the carrier that was liable for the loss. That is one reason it wants your signed broker-carrier agreement, the bill of lading and your communications with the carrier.
For interstate shipments, the Carmack Amendment governs a motor carrier's liability for loss or damage to freight. The carrier's cargo policy is a separate contract that pays that liability up to its limit and subject to its exclusions. A disputed claim is a question for a transportation lawyer.
Send us your freight broker details. We quote contingent cargo and contingent auto liability by email off a written application, and we send the application with samples of the two documents brokers most often lack. A brand-new brokerage can be quoted too.